Earnings Management in Malaysian Public Listed Family Firms

Boon Heng Teh, Tze San Ong, Lau Yi Ying

Abstract


ABSTRACT

The rise of accounting-related scandals has highlighted the prevalence of earnings management in financial markets. This paper offers empirical evidence on the motivations for earnings management in Malaysia public listed family firms. A sample of 100 family firms were randomly selected from Bursa Malaysia from the years 2010 to 2014, which resulted in 500 observations in total. The results indicate that the equity ownership held by a controlling family is associated with the earnings management in the firm, since the controlling family has greater power and rights in decision-making. However, the involvement of the controlling family as board of directors is not associated with earnings management in the family firm, since the non-executive member of the board will become the chairman to oversee and monitor the business operations of the family firm. The indirect ownership of the controlling family in family firms does not provide greater opportunity for them to manage earnings through direct equity shares held by other family members because they have limited power through indirect ownership.

Keywords: Earning management; family firms; financial performance; Malaysia

ABSTRAK

Skandal perakaunan yang semakin berleluasa telah menyerlahkan amalan pengurusan perolehan di pasaran kewangan sejak sekian lama. Kajian ini menawarkan bukti empirikal mengenai motivasi untuk pengurusan pendapatan di kalangan firma keluarga yang tersenarai di Malaysia. Sebanyak 100 firma keluarga telah dipilih secara rawak dari Bursa Malaysia bagi tahun 2010 hingga 2014, iaitu mewakili 500 pemerhatian secara keseluruhan. Dapatan kajian menunjukkan bahawa pemilikan ekuiti dengan kuasa kawalan oleh oleh keluarga mempunyai hubungan dengan pengurusan perolehan kerana keluarga yang mengawal mempunyai kuasa dan hak yang lebih besar dalam pembuatan keputusan. Walau bagaimanapun, penglibatan keluarga yang mengawal sebagai lembaga pengarah tidak dikaitkan dengan pengurusan pendapatan di firma keluarga kerana anggota lembaga bukan eksekutif akan menjadi pengerusi untuk mengawasi dan memantau operasi perniagaan firma keluarga. Pemilikan tidak langsung keluarga yang mengawal dalam firma keluarga tidak memberikan peluang yang lebih besar kepada mereka untuk mengurus perolehan melalui saham ekuiti langsung yang dipegang oleh ahli keluarga lain kerana mereka mempunyai kuasa terhad melalui pemilikan tidak langsung.

Kata kunci: Pengurusan perolehan; firma keluarga; prestasikewangan; Malaysia


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